SouthCrest Financial Group Reports Preliminary 1Q17 Earnings

WOODSTOCK, Ga., April 20, 2017 (GLOBE NEWSWIRE) — Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary net income of $930,000 or $0.11/share for the first quarter ended March 31, 2017.

“I think the first quarter’s results are a good barometer of where the Company stands. On a net basis our core earnings and un-adjusted earnings are effectively the same. We were excited to recently announce the dividend expense savings created by the final Series A and Series B Preferred share redemption (former TARP shares), and we are starting to see the impact of recent Atlanta metro region lending hires as we get ready to move into our Midtown headquarters during May,” Schmitt said.

“Unfortunately, we did have a delay in the closing of our Alabama branch sale due to regulatory schedules,” Schmitt continued. “This is a top focus of senior management, and we are very confident that the deal will be completed even if the timeline has been stretched.

“The Company has two former locations in OREO and awaiting sale, which could cause additional one-time expenses during the next several quarters. Outside of that, management continues to push on expenses while taking the next steps to improve the loan book and overall profitability of the Bank. Our long term profitability target, which could be hit on a quarterly basis as early as late 2018, remains 1.0% ROAA,” Schmitt added.

Core pre-tax earnings for the quarter were $1.36 million, with net unusual items during the quarter totaling $32,000 of pre-tax income. On a core basis, expenses for the quarter were $4.4 million, flat with the past few quarters, but down over 15% from 1Q16.

Loan balances were down less than 1% from 4Q16 and up 3% from 1Q16, with the weakness in growth due to a slow start to the quarter combining with the welcome payoff of the largest substandard loan in the portfolio at no loss. Activity late in the quarter improved and should lead to a good second quarter result. The Company continues to look for additional bankers who can drive both loan and deposit growth in the metro Atlanta area.

Deposits were lower year over year and linked quarter by 2%, which was consistent with historic seasonality. Overall deposit mix continues to improve with balances in transaction accounts up 3% year over year, with a 7% year over year decline in CD balances.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank declined to 8.82% as a result of the $3.9 million dividend to the holding company as part of the preparation to redeem the former TARP shares. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.19 per share. This metric will continue to be influenced by OCI changes resulting from the swings in interest rates. Currently, the negative impact to TBV by OCI is $0.13/share. The current fully converted share count at the end of the quarter is 8.39 million shares. In addition, the Company still retains a small deferred tax asset valuation allowance related to state taxes that totals approximately $0.06/fully converted share.

Asset quality remained solid with the aforementioned payoff of a nearly $3 million substandard loan. The Company maintains $2.1 million of former bank buildings that are projected to be sold over the next several quarters in OREO. Excluding these buildings, 1Q17 NPAs/total assets was flat at 0.84% of assets, including the buildings the number level was 1.23%. Excluding the impact of the Bank buildings in OREO, OREO balances were down to $499,000.

ABOUT SOUTHCREST

SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, GA until May 2017, at which time it will relocate the Bank and Financial Group headquarters to Atlanta. The Company operates a 10 branch network throughout Georgia and Alabama through its subsidiary bank, SouthCrest Bank, N.A. The Bank provides a full suite of retail and commercial banking services, and online banking services.

FORWARD LOOKING STATEMENTS

This presentation may contain certain “forward-looking statements” that are subject to risks, uncertainties, and other factors that could cause actual results and shareholder values to differ materially from those projected. Factors that could cause or contribute to such differences include economic conditions, government regulation and legislation, changes in interest rates, credit quality, competition, and other risk factors.

Statement of Operations ($000s, Unaudited)

2016

2017

Q1

Q2

Q3

Q4

Q1

Interest Income

Loans

Construction and Development

$

206

$

143

$

153

$

150

$

197

Commercial Real Estate

1,465

1,479

1,537

1,645

1,691

Commercial Loans

280

280

276

291

316

Multi Family

26

18

18

31

27

Residential Mortgage

1,415

1,337

1,289

1,230

1,190

Consumer Loans

166

156

139

122

117

County/Municipal Loans

29

28

29

42

25

Loss Share Loans

116

132

132

119

111

Investment Securities

Federal Funds/Overnight Funds

$

38

$

27

$

42

$

28

$

58

Bank Owned CDs

7

8

6

6

5

Investment Securities

1,030

1,083

933

1039

967

Total Interest Income

$

4,779

$

4,685

$

4,556

$

4,703

$

4,705

Total Interest Expense

$

299

$

267

$

246

$

247

$

249

Net Interest Income

$

4,480

$

4,417

$

4,311

$

4,456

$

4,456

Provision for Loan Losses

50

0

0

94

106

Net Interest Income after Loan Losses

$

4,430

$

4,417

$

4,311

$

4,362

$

4,349

Other Income

Service Charges on Deposits

$

105

$

215

$

245

$

228

$

216

NSF/Overdraft Fees

475

515

575

542

488

Other Service Charges

74

79

96

83

75

ATM/Billpay/DR Card Income

293

336

302

303

296

Other Income

829

(47

)

339

(386

)

451

Total Other Income

$

1,776

$

1,098

$

1,560

$

768

$

1,526

Non-Interest Expense

Salaries, Other Comp (+ FAS123R)

$

2,006

$

1,772

$

1,705

$

2,014

$

1,799

Employee Benefits

591

360

707

463

438

Occupancy & FF&E Expense

933

848

860

764

739

Professional Fees

174

209

212

190

190

Data Processing

305

521

536

525

498

OREO/Credit related Exp.

41

36

36

36

50

Other Expense

1,243

927

861

694

766

Total Noninterest Expenses

$

5,293

$

4,673

$

4,917

$

4,687

$

4,480

Pre-Tax Income (Loss)

$

913

$

842

$

954

$

443

$

1,395

Income Taxes

–

(10,592

)

274

128

465

Net Income

$

913

$

11,434

$

680

$

315

$

930

Preferred Dividends

$

125

$

125

125

$

125

$

125

Balance Sheet ($000s, Unaudited)

2016

2017

Assets

Q1

Q2

Q3

Q4

Q1

Current Assets

Cash & Due from Bank

$

30,427

$

34,838

$

31,268

$

33,015

$

41,302

Federal Funds/Overnight Funds

3,306

569

0

4,299

6,688

Bank Owned CDs

1,815

1,716

1,218

1,069

1,069

Investment Securities

191,905

161,177

182,614

176,723

152,583

Mortgage Loans Held for Sale

0

0

0

0

0

Total Current Assets

$

227,452

$

198,300

$

215,100

$

215,106

$

201,642

Loans

Construction and Development

$

13,692

$

11,285

$

9,776

$

15,159

$

12,486

Commercial Real Estate

116,175

119,419

121,609

138,155

140,003

Commercial Loans

21,296

21,863

21,247

23,462

23,923

Multi Family

1,450

1,419

1,401

2,281

2,093

Residential Mortgage

110,094

107,270

102,512

97,194

98,302

Consumer Loans

7,096

7,977

7,363

6,893

6,117

County/Municipal Loans

3,537

4,501

6,456

3,387

2,999

Loss Share Loans

9,360

7,689

7,589

7,123

6,626

Total Loans

$

282,700

$

281,425

$

277,952

$

293,654

$

292,549

Allowance for Loss

(3,021

)

(2,817

)

(2,701

)

(2,766

)

(2,797

)

Net Loans

$

279,679

$

278,608

$

275,251

$

290,888

$

289,752

OREO

1,500

1,769

936

3,581

2,728

FDIC Indemnification

419

433

425

304

238

BOLI

20,391

20,548

20,683

20,816

20,947

Fixed Assets, net

$

17,671

$

17,362

$

16,967

$

13,717

$

13,429

Intangible Assets

583

555

507

468

420

Other Assets

6,651

33,982

16,476

17,953

17,428

Total Assets

$

554,346

$

551,557

$

546,385

$

562,833

$

546,584

Liabilities & Stockholders’ Equity

Liabilities

Deposits

DDAs

$

119,343

$

112,974

$

111,290

$

125,459

$

112,286

Interest Bearing Demand

61,172

55,248

54,552

65,654

63,949

Celebration Checking

108,076

110,894

111,544

112,355

113,548

Money Market Accts

35,289

33,858

33,956

32,271

27,942

Savings

55,831

53,397

52,061

50,495

51,304

CDs Less Than $100k

79,221

76,301

73,964

72,091

70,020

CDs Greater than $100k

39,576

40,585

39,832

38,922

39,966

Total Deposits

$

498,508

$

483,257

$

477,388

$

497,247

$

479,018

Other Liabilities

1,988

1,919

2,281

1,252

1,632

Net Borrowings (Wholesale Funding)

–

–

317

–

–

Total Liabilities

$

500,496

$

485,176

$

479,797

$

498,499

$

480,650

Total Equity

53,850

66,381

66,548

64,334

65,934

Total Liabilities & Stockholders’ Equity

$

554,346

$

551,557

$

546,345

$

562,833

$

546,584

Ratios

1Q 2016

2Q 2016

3Q 2016*

4Q 2016*

1Q 2017*

ROAA

0.66

%

8.29

%

0.53

%

0.22

%

0.72

%

ROAE

6.80

%

76.1

%

4.74

%

1.96

%

6.52

%

NPAs/Assets (Core)

1.18

%

1.08

%

0.91

%

0.83

%

0.84

%

Est. Tier 1 Leverage

8.94

%

9.54

%

9.84

%

9.73

%

10.09

%

Total Common Equiv. Shares

8,380,337

8,380,337

8,380,337

8,389,954

8,389,954

NIM

3.47

%

3.59

%

3.59

%

3.67

%

3.72

%

Cost of Funds

0.24

%

0.22

%

0.20

%

0.20

%

0.21

%

Loan/Deposit

56.6

%

58.2

%

58.2

%

59.0

%

60.3

%

Employees

129

127

123

122

122

*3Q2016 and later ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016. 2Q 2016 includes DTA valuation allowance recovery.